Derwin Frazier, 45, and his wife Veronica, 44, both of Pearland, Texas, have been sentenced to prison for their roles in the sham sales of the Kirby Lofts condominium complex and others.
As reported by Mortgage Fraud Blog, Derwin Frazier previously pleaded guilty to conspiracy to commit money laundering, while Veronica Frazier entered a plea to conspiracy to commit wire fraud. U.S. District Judge Lee H. Rosenthal handed Derwin an 85-month sentence and further ordered he pay $16,316,102. His wife will serve one year and a day in federal prison and pay $321,742 in restitution.
The charges stem from a scheme to defraud residential lenders in connection with single family residences and individual condominium purchases in a building located at 917 Main, Houston, Texas, aka The Kirby Lofts. The Kirby Lofts and other single family homes were sham sales.
From about December 2004 to October 2006, Derwin Frazier recruited individuals with good credit to act as borrowers in applications for mortgage loans to purchase units in Kirby Lofts and elsewhere. Co-conspirators, such as Brenda East, 51, assisted these “straw borrowers” with providing false information and documents, including bogus tax letters and false verifications of bank balances and employment, to induce lenders to fund residential home purchases. Derwin and Veronica Frazier submitted invoices for payment from loan proceeds and used the money to pay themselves and straw borrowers from loan proceeds.
East pleaded guilty to conspiracy to commit wire fraud and was sentenced to 57 months in prison. A fifth defendant, Duane Wardell, 50, Palestine, Texas, also pleaded guilty to conspiracy to commit wire fraud and is awaiting sentencing on December 14, 2012.
United States Attorney Kenneth Magidson announced the sentences.
The investigation leading to the charges was conducted by the FBI and Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys Belinda Beek and Martha Minnis are prosecuting the case.
The case is part of President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF) and was part of Operation Stolen Dreams, a nationwide dragnet that targeted mortgage fraudsters throughout the country.
The FFETF was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.